In 2014, the Supreme Court of India canceled more than 200 coal mine allocations due to alleged corruption (‘Coalgate’). This exogenous change in allocation of coal to power plants is the policy setting of this research.

Why this study

What causes power outages in India? What is the role of supply side constraints? This project aims at answering these questions by shedding light on the role of supply side distortions in causing power outages in India. The study will look into the specific distortion of constraints in supply of coal to thermal power plants.

Approach

The primary goal is to measure the economic cost of constraints in supply of coal in India. Using the actual consumption of coal by power plants, this study demonstrates that the supply side constraints result in power outages to the order of 600 GWh per year. This is enough electricity to provide power to 0.75 million people in a year.

In addition, the research project aims to understand how to efficiently allocate natural resources in emerging economies.